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  • Rent vs. buy calculator

    Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision. Click the "View Report" button for a detailed look at the results. (Please note: This calculator is intended to provide approximate information on loan payments and does not constitute an offer to extend credit. Your actual payment information may vary.)


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    Definitions

    Price of home
    Purchase price of the home you wish to buy.
    Cash on hand
    Cash you have for the down payment and closing costs.
    Interest rate
    The current interest rate you can receive on your mortgage.
    Term in years
    The number of years over which you will repay this loan.
    Property tax rate
    Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.
    Home insurance rate
    Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.
    Loan origination rate
    The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.
    Points paid
    The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.
    Other closing costs
    Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.
    Association and maintenance fees
    Any association fees you are required to pay with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.
    Total for down payment
    Total funds remaining for down payment.
    Mortgage amount
    Total amount of loan.
    After-tax investment return
    The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.
    The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2005, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year. During this period, the highest 12-month return was 61%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less.
    It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect additional sales charges and fees that funds may charge.
    Monthly rent payment
    Amount you currently pay for rent per month.
    Income tax rate
    Your current marginal income tax rate.
    Expected inflation rate
    What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2005. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.
    Home appreciates at
    Annual appreciation you expect in the home you are purchasing.
    Future sales commission
    The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.
    House payment
    Total of principal, interest, taxes and insurance (PITI) paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.
    Principal payment
    Total of principal paid per month on your mortgage.
    Tax savings
    The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250. (At a tax rate of 25%).
    Net house payment
    Your house payment minus the value of the tax deduction and principal payment.
    Net home price
    Net selling price of your home after subtracting any sales commissions.
    Monthly PI
    Monthly principal and interest payment.
    Monthly PMI
    Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

    Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. All calculations are based on user inputs and do not reflect any guarantee or commitment of the loan, interest rate, expected savings or tax advantage. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.